US Secretary of Treasury Steven Mnuchin testifies at a hearing before the House Financial Services Committee on Capitol Hill in Washington DC, the United States, on July 27, 2017. [Photo/Xinhua]

WASHINGTON - US Secretary of Treasury Steven Mnuchin said on Thursday that housing finance reform remains a priority for the Trump administration.

"The current system - in which the GSEs (government-sponsored enterprises) remain in perpetual Federal Housing Finance Agency (FHFA) conservatorship - is not sustainable and leaves taxpayers at risk," Mnuchin said at a hearing before the House Financial Services Committee.

"Our housing finance policy should be clear and should be designed to provide financing for homeowners and owners of multi-family units.

Additionally, such policy should increase private sector participation and protect taxpayers," he said.

US mortgage finance firms Fannie Mae and Freddie Mac were put under conservatorship by the US government after suffering heavy losses from the collapse of the subprime mortgage market in 2008. The US Treasury pumped about 187.5 billion US dollars into the two companies to keep them afloat.

The two mortgage giants own or guarantee about half of all mortgages in the United States. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past several years.

"Today, the federal government's role in housing finance is even greater than it was before the crisis. The overwhelming majority of new mortgages are issued with government backing in a highly concentrated securitization market," Federal Reserve Governor Jerome Powell said earlier this month, warning the current housing finance system leaves the United States "both potential taxpayer liability and systemic risk."

"The most obvious and direct step forward would be to require ample amounts of private capital to support house finance activities, as we do in the banking system," he said.

While it's agreed that the status quo, a government-dominated mortgage market with insufficient private capital, is unsustainable, Republicans and Democrats can't reach a deal on the specific role for government in the new house finance system.

"If there's any guarantees from the government going forward, they should be explicit and paid for and done so in a way that doesn't put taxpayers at risk," Mnuchin told lawmakers.

"We're determined to find a solution, because this is a huge part of the economy, and leaving them (Fannie Mae and Freddie Mac) in conservatorship for the next four years makes no sense," he said.